Jurisdiction and applicable law in electronic commerce

Electronic Commerce Project (ECP)'s Ad hoc Task Force

This paper sets out general business views on online transactions and consumer protection in the context of jurisdiction and applicable law. It does not address issues of intellectual property protection, taxation or other aspects of electronic commerce.

Business is chiefly concerned about uncertainty and aggressive assertion of jurisdiction and applicable law in business-to-consumer (B2C) e-commerce, with emphasis on the distinction between the principles of "country-of-origin" and "country-of-destination".

ICC notes that the Internet provides significant consumer empowerment through increased competition, evolving business models and technology. Consistent with this empowerment, business recommends to governments a systematic approach to resolving online consumer disputes: and urges them to: make reasonable attempts to utilize a company's internal customer satisfaction mechanisms; utilize online alternative dispute resolution (ADR); and if the dispute persists, resort to legal action.

In addition, ICC urges governments to 1) avoid expansive jurisdictional claims by applying principles of "country-of-origin" and party autonomy, 2) allow self-regulation to demonstrate its efficacy, and 3) combat fraud and crime on the Internet.

Electronic commerce - business conducted over the Internet and other computer networks - is growing explosively. The Internet is a global medium that is open across all frontiers, and once posted, a website is global from the outset. Likewise, transactions, as well as commercial and promotional material on websites become global. More frequently and more directly, enterprises of all sizes trade with and advertise to suppliers and customers (both businesses and consumers) located abroad.

Inevitably, some of these dealings result in commercial disputes that must be resolved privately or at law. In addition, many e-commerce transactions raise questions of compliance with applicable public laws and sectoral regulations. Governments, judiciaries and legislatures are just beginning to grapple with the question of whose laws apply in cyberspace, and the parties themselves all too often exhibit no clear understanding as to whose rules govern the arrangement and what recourse is available in the event of a dispute.